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Financial Development, Internationalisation and Firm Value

Author

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  • Thomas O’Connor

    (Thomas O’Connor, Department of Economics, Finance and Accounting, National University of Ireland Maynooth, Maynooth Co. Kildare, Ireland. E-mail: thomas.g.oconnor@nuim.ie)

Abstract

In this article I show that both aspects of financial development, namely, liberalisation and deepening, and financial internationalisation proxied using cross-listings in the US creates value for emerging market firms. Financial deepening, or more precisely, stock market deepening enhances value. In contrast, bank sector deepening only serves to reduce value because it is associated with large-scale corporate expansion and a fall in market capitalisation. Like others, I document a cross-listing premium for Level 2/3 cross-listings in the US. The cross-listing premium is typically less than the gains from financial liberalisation, but they are similar in magnitude over the period examined.

Suggested Citation

  • Thomas O’Connor, 2011. "Financial Development, Internationalisation and Firm Value," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 10(1), pages 21-71, April.
    • Handle: RePEc:sae:emffin:v:10:y:2011:i:1:p:21-71
    DOI: 10.1177/097265271101000102
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    References listed on IDEAS

    as
    1. Bianconi, Marcelo & Tan, Liang, 2010. "Cross-listing premium in the US and the UK destination," International Review of Economics & Finance, Elsevier, vol. 19(2), pages 244-259, April.
    2. Billmeier, Andreas & Massa, Isabella, 2009. "What drives stock market development in emerging markets--institutions, remittances, or natural resources?," Emerging Markets Review, Elsevier, vol. 10(1), pages 23-35, March.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Lars Oxelheim & Trond Randøy & Arthur Stonehill, 2012. "What can international finance add to international strategy?," Chapters, in: Handbook of Research on International Strategic Management, chapter 12, pages 238-253, Edward Elgar Publishing.

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    More about this item

    Keywords

    JEL Classification: G15; JEL Classification: F36; Financial liberalisation; financial deepening; internationalisation; Tobin’s q;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration

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